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FTC Takes Action Against Prerecorded Sales Calls

By Eric Sinrod

Do you hate prerecorded sales calls? If so, you are not alone. Indeed, the Federal Trade Commission (FTC) has been inundated with complaints about such calls. As a result, the FTC has just announced an amendment to the Telemarketing Sales Rule (TSR) that expressly bars telemarketing calls that deliver prerecorded messages, except as to people who have agreed in advance to receive these calls from specific sellers.

It is important to note that this amendment does not stand in the way of calls that provide solely "informational" prerecorded messages. These types of calls notify recipients of information, such as notifications about flight changes and cancellations, appointment reminders and the like. These calls are not within the scope of the amendment prohibition because the prerecorded messages do not attempt to sell goods or services.

These developments flowed from a process that began with the telemarketing industry proposing a revision to the TSR to permit calls with prerecorded messages to consumers with whom the sellers already had a business relationship. In essence, this proposal would have allowed sellers to offer for sale additional goods and services to consumers with prior business relationships with the sellers by way of prerecorded messages.

Thousands of comments were submitted to the FTC with respect to this proposal. The overwhelming majority were in opposition.

As a result, in October 2006, the FTC suggested a broad prohibition against prerecorded calls whenever intended recipients had not given prior written consent. The TSR amendment just announced by the FTC adopts the FTC's position from October 2006.

So, what are the details of the TSR amendment? Among other details:

Telemarketing sales calls that deliver prerecorded messages are expressly prohibited, whether answered in person or by an answering machine or voicemail service, unless the seller previously has received the recipient's signed, written consent.

Sellers are permitted to obtain the required permission for prerecorded message sales calls in any manner permitted by the Electronic Signatures In Global and National Commerce Act (E-SIGN Act).

Healthcare-related prerecorded message calls that are subject to the Health Insurance Portability and Accountability (HIPAA) are exempt from the ban on telemarketing calls that provide prerecorded messages.

Charitable solicitation calls made by for-profit telemarketers that provided prerecorded messages for non-profits to members of or prior donors to the non-profits are exempt from the written agreement requirement, but such calls must include a prompt keypress or voice-activated opt-out procedure.

By December 1, 2008, sellers and telemarketers must provide at the start of all prerecorded messages an automated keypress or voice-activated opt-out procedure in order to let consumers opt-out as easily as they could from a live telemarketing call.

Sellers, under a "forbearance policy" that would continue for one year, are permitted to place calls providing prerecorded messages to consumers with whom they have an established business relationship, after which such calls would not be allowed absent express permission.

In addition to the foregoing, the amendment requires that prerecorded telemarketing calls must allow the telephone to ring for at least 15 seconds our four rings before an unanswered call is disconnected, start the prerecorded message within 2 seconds of a completed greeting by the person who answers, disclose at the outset that the recipient may asked to be placed on the seller's do-not-call list at any point during the call, make an opt-out procedure available when the call is answered by a person, and provide a toll-free number for opt-out if the call is answered by an answering machine or voicemail.

In terms of timing, the part of the amendment that requires that all prerecorded telemarketing calls provide an automated opt-out procedure becomes effective on December 1, 2008. The part of the amendment that requires permission from consumers to receive these calls becomes effective on September 1, 2009.

The days of prerecorded telemarketing calls without express permission are coming to an end. If you have been on the receiving end of such calls, this may be heartening news. If you have been on the sending end, this may appear negative. However, if this development makes for happier consumers, in the long run it could lead to greater consumer satisfaction and sales.

Communications

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